Mexican labor market stagnation likely short-lived

The growth slowdown in H1 led to stagnation in the Mexican labour market. On a seasonally adjusted basis, the unemployment rate remained unchanged at 4.4% in Q2 compared with its Q1 value. 

"With growth numbers improving from June onward (particularly in the manufacturing sector), the unemployment rate is expected to resume its decline in July. A two-tick decline in the seasonally adjusted rate is expected to 4.20% in July, although the non-adjusted unemployment rate should rise to 4.66%", estimates Societe Generale. 

Recent fluctuations aside, both these indicators have declined between 0.5% and 1.0% over past 12 months and are nearly at levels last seen in 2008. With the economy likely to accelerate again in H2 and beyond, labour market conditions is foreseen to improve in the near-/medium-term, boosting consumer confidence and consumption spending, says SocGen in a research note to its clint.